IRS finalizes 10-year RMD rules for inherited IRAs

The Treasury Department and the Internal Revenue Service (IRS) have issued final regulations regarding the 10-year required minimum distribution (RMD) rule for inherited individual retirement account (IRA) assets.

Under these guidelines, most beneficiaries of inherited retirement accounts must fully distribute the assets within 10 years of the original account holder's death. The regulations clarify that most beneficiaries are required to take annual RMDs throughout that decade to reach full withdrawal by the end of the 10th year.

Certain individuals are exempt from this 10-year mandate and are classified as eligible designated beneficiaries. These exceptions include surviving spouses, minor children of the account holder who have not reached age 21, individuals who are disabled or chronically ill, and individuals not more than 10 years younger than the original account owner. Non-designated beneficiaries, such as charities or estates, are also subject to different rules.